uploads/2015/10/Performance2.jpg

Offshore Drillers’ October Fleet Reports: Good News, Bad News

By

Updated

Average stock return in October

The star performer for October in the Offshore Drilling (OIH) industry is Pacific Drilling (PACD), which rose 40%. Share prices for Noble (NE), Ensco (ESV), and Atwood Oceanics (ATW) each rose 20%.

For the same period, other offshore drilling stocks such as Diamond Offshore (DO), Transocean (RIG), and Seadrill (SDRL) rose 21%, 24%, and 14%, respectively. Since few companies are being awarded new contracts, this brought positive sentiment to the offshore drilling industry, and share prices jumped.

Article continues below advertisement

Transocean and Rowan

Transocean (RIG) hasn’t gotten any new contracts in the last month. For its existing contract with Petrobras, the day rate was reduced to $407,000 per day from the earlier $510,000 per day. The company hasn’t exercised any contract extension against its day rate reduction. Rowan Companies (RDC) hasn’t gotten any new contracts since August.

Ensco 

Ensco (ESV) released its fleet update on October 19, 2015. Ensco investors received some good news and some bad news.

  • The Ensco 68 Jackup received a new five-month extension with Chevron but at a reduced day rate. Earlier, the rig was operating around $110,000 per day. The revised day rate is $60,000.
  • Two floaters that contracted with Petrobras earlier at a day rate of about $350,000 have been reduced to around $340,000 per day. Similarly, another two floaters earlier contracted at $310,000 per day had their day rates lowered to $300,000 per day.
  • The company secured a new contract for its Ensco 70 Jackup with Maesk, but the day rate was reduced on another contract with Maesk (Ensco 71) from $170,000 to $90,000.
  • Ensco has exercised contract extensions on a few of its Jackups at reduced day rates.
  • The company received notice from Saudi Aramco regarding early termination for the Ensco 84 Jackup.

Noble

Noble (NE) has secured two new contracts. One is for its Jackup Noble Sam Hartley at a day rate of $111,000, and the other is for its Semisubmersible Noble Danny Adkins at a day rate of $206,000. The company also secured a contract extension on its Jackup Noble Houston Colbert. The extension rate is lower at $175,000, down from $243,000.

The Offshore Drillers’ October Fleet Reports brought some positive sentiments in the offshore drilling industry. But lower day rates and contract terminations still remain a big concern. In this series, we’ll look at some key indicators to gauge the outlook for the offshore industry.

Advertisement

More From Market Realist